PESTEL analysis is an essential tool in the hand of marketing professionals for analyzing macroeconomic environment of a market. It helps the related professionals or the management of a company to understand the current marketing environment of the targeted market and help to adopt the best possible strategy. BookMyEssay, the renowned academic assignment help service, provides necessary marketing assignment writing expert support to the students who are looking for help in writing PESTEL analysis related assignments.
The letters in the term PESTEL stands for the following:
P – Political factors
E – Economic factors
S – Social factors
T – Technological factors
E – Environmental factors
L – Legal factors
Importance of PESTEL
It is necessary to understand the significance of each of the factors of PESTEL and how does the tool help the professionals in this field to analyze the market and take necessary steps accordingly?
Several political factors, directly and indirectly, influence the strategy a company needs to take in the market. This includes political stability of the of the current government, government’s policies, foreign trade policy, taxation policy, environmental law, labor law, trade restrictions and many other factors.
Several economic factors determine how an organization does business and how profitable they can do that business? These factors include – economic growth of the economy, prevailing banking interest rates, inflation, and so on. Economic factors are further divided into two parts: macro-economic and micro-economic factors. Macroeconomic factors deal with the demand and supply factors in the concerned economy while the microeconomic factors deal with how the consumers spent their disposable income in acquiring necessary and luxurious products and services.
It relates to all socio-cultural factors that directly and indirectly influence the buyer behavior in the targeted market. It includes social and religious restrictions, population growth, health and hygiene consciousness among people and so on.
These factors have a huge impact on the marketing strategy of a company. All the technological factors have a two-way effect in the market: how technology is changing the supply chain process and how the company can communicate with the consumers in the market?
Raw materials for a production process is always scaring. In recent times, a few factors of productions like fuel, water, and other non-renewable energies are becoming more valuable. On the other hand, increasing emphasis on pollution control, social and political restrictions on the use of non-renewable and poisonous raw materials and many other related factors have been getting extreme importance in the marketing of a product.
Basic legal factors include safety, health, advertising norms, consumer rights and laws, production process, product labeling norm, and ethical standard of the product. A company should be aware of all legal bindings. Every company, working within a legal framework, needs to know the restrictions and what they can do and what not?
It is obvious that the factors included in the PESTEL analysis are crucial for any business; however, the individual importance of the factors varies depending on the market where the business is working.